Bradford v. Jai Med. Sys. – Theory of Apparent Agency Challenged

In a ruling that does not bode well for patients of Medicaid, the highest court in Maryland recently rejected a plaintiff’s claim of apparent agency in attempting to hold liable the entity that contracts health care providers to patients enrolled in the state medical program.

The Maryland Court of Appeals held in Bradford v. Jai Med. Sys. Managed Care Org. Inc. that while a managed care agency can be held vicariously liable for the negligence of a doctor in network under the theory of apparent agency, the belief has to be reasonable based on the facts.

Although this isn’t a Florida case, our West Palm Beach medical malpractice lawyers recognize the ruling could be relevant for Florida courts weighing similar issues. The ruling is hopeful in that it does allow for patients to sue contracted health care providers on vicarious liability grounds, but the threshold is strict.

The facts of the case aren’t in question. According to court records, the petitioner suffered significant injury to her foot that required partial amputation.

The petitioner received Medicaid benefits, which were doled out through a managed care organization. These organizations vary to some extent, but the general consensus is that they exert great influence over the health care decisions of members. In many cases, these organizations dictate when and how members can receive medical care services.

The managed care organization doesn’t employ its own health care providers. Instead, it contracts with groups of doctors, hospitals, pharmacies and others to be a part of the network. The network operates under the name of the managed care organization.

Among those physicians in the network was the doctor in question.

In 2008, a 54-year-old Medicaid recipient, a widow with two adult children and an eighth-grade education, was experiencing foot pain stemming from a bunion on her right foot. She sought a referral from a network podiatrist to a specialist. She was given a referral to the defendant doctor.

The specialist recommended surgery, which he performed within two weeks of that first meeting. It was performed at a nearby hospital, and she was discharged the same day.

Five days later, she was back at his office for a follow-up visit. The bandages were unwrapped and changed, and she was told to return in a few days. During that second follow-up visit, a nurse discovered the foot had developed gangrene.

She was immediately admitted to the hospital, where a portion of her foot had to be amputated. She underwent a bypass on that leg as well. She now suffers permanent injuries and scarring.

The plaintiff filed a medical malpractice action against the doctor and the hospital for negligent operation and failure to perform adequate and timely post-operation examinations. She also alleged defendants hadn’t received her informed consent prior to the procedure because they hadn’t told her that because of her pre-existing circulatory condition, blood flow obstructed to the legs could put her at risk for the injuries she later suffered.

The plaintiff amended her complaint to include the managed care organization.

The circuit court entered a default judgment against the doctor, with damages to be determined at trial.

Meanwhile, the managed care organization moved for a summary judgment on the grounds that it didn’t employe the doctor – or any doctor, for that matter.

At the conclusion of the trial, a jury awarded the woman $65,000 in compensatory damages and $3 million in punitive damages. Statutory damage caps reduced the award to $700,000. The jury also found the managed care organization liable.

The managed care organization appealed. The Court of Special Appeals reversed, finding the court should have granted the company’s motion for summary judgment prior to trial.

The state’s high court then weighed in. The plaintiff acknowledged the doctor didn’t work for the managed care organization and that no actual agency relationship existed. However, she indicated that per the theory of apparent agency – or when the appearance of a relationship existed – the firm should be held liable.

The Maryland Court of Appeals disagreed. The issue is about context. Did the patient reasonably believe the two were connected? The court found the plaintiff had failed to present enough evidence to support this assertion.

This doesn’t mean she lost her case. It does mean, however, that the managed care organization will not be responsible for having to pay a portion of the damages.

If you are a victim of medical malpractice, contact the Hollander Law Firm at 888-751-7770 for a free and confidential consultation. There is no fee unless we win.